Document Fragment View

Matching Fragments

- B VA= x 100 A   where VA is value addition, A is FOB value of exports realised by EOU unit and B is a sum total of CIF value of all imported inputs, the CIF value of all imported capital goods and the value of all payments made in foreign exchange by way of commission, royalty, fees, dividends interest on external borrowings during the first five years period or any other charges. "Inputs" mean raw materials, intermediates, components, consumables, parts and packing materials. It further appears that as per the amended Exim Policy, the Director General of Foreign Trade prescribed the procedure in respect of the operation of revised value addition criteria applicable to export oriented units. In terms thereof, the existing/approved units were required to exercise an option within three months from the date of public notice which was also published on 16th August, 1993 either to continue under the old formula or change over with effect from 1993-94 to the revised value addition formula. The export oriented units opting for new value addition formula were required to submit to the Development Commissioner of the concerned Zones their past performance, fresh projections of exports, Imports, other foreign exchange outgo and net foreign exchange earnings for the next five years. It was also required of the units opting for computation of value addition in accordance with new formula to execute a new Legal Agreement in the prescribed format after approval to the concerned units to change from old formula to the new formula in respect of value addition. The Petitioners by their letter dated 29th December, 1993 addressed to the Deputy Development Commissioner opted for change over to new value addition formula and along with application seeking option for change over, requisite information was provided but the said application seeking option for change over was later on withdrawn by Petitioners. It may be noted here that the Petitioners by their letter dated 20th April, 1995 addressed to the Development Commissioner applied for permission to sell 75% of their production in DTA. The said application was in pursuance to the stipulation in Paragraph 102 of Chapter IX of Exim Policy. The Development Commissioner by his letter dated 12th May 1995 informed the Petitioners that during the period 1st January, 1994 to 31st March, 1995 the first Petitioner has achieved the value addition of 28.88% as against the value addition of 54.45% (purported to be opted by Petitioners) and accordingly the Petitioners were ineligible for DTA sale. Thereafter the Petitioners by their letter dated 9th June, 1995 applied to the Development Commissioner for revision in the value addition percentage of the first Petitioner's unit and for fixing it at 30.03% in view of the revised projections and the changed conditions stated in the said letter. The Development Commissioner by letter dated 22nd June, 1995 approved the revised proposal of the Petitioners for period from 1995-96 to 1999-2000 whereby value addition was approved at 30.03% and it was mentioned that the letter of permission dated 17th December, 1991 may be deemed to have been amended to that extent. It may be noted here that thereafter the Petitioners withdrew their option letter dated 29th December, 1993. The Petitioners then by their letter dated 8th July, 1995 sought permission from second Respondent for DTA sale entitlement as on 31st March, 1995. The Development Commissioner was informed by the Petitioners that during 1st January, 1994 to 31st March, 1995 the Petitioners' unit had achieved value addition at 28.88% which was more than 90% of the revised value addition approved by the Development Commissioner. However, the Development Commissioner by letter dated 17th July, 1995 informed the Petitioners that as the value addition achieved by the Petitioners' unit was below the industrial norms of 30%, it was not possible to agree to the Petitioners' proposal, and Petitioners cannot be permitted for DTA sale from 1st January, 1994 to 31st March, 1995. It appears that the Petitioners thereafter by their letter dated 27th July, 1995 applied to the Development Commissioner for permission to sell 25% of production in DTA. Along with application the Petitioners submitted various documents including statement of exports from 1st January, 1994 to 30th June, 1995. The Development Commissioner by letter dated 1st August, 1995 asked the Petitioners to complete various formalities as stated in their letter and also to exercise their option for submitting DTA claim on quarterly, half-yearly or yearly basis as per the guidelines given in the Handbook of Procedures. The Petitioners in response thereto submitted the requisite information to the Development Commissioner and also exercised their option for submitting DTA claim on quarterly basis in future. The Development Commissioner by letter dated 11th August, 1995 asked the Petitioners to adjust the balance quantity of advance DTA sale at an early date. Second Respondent in the communication dated 11th August, 1995 brought to the notice of the Petitioners that value addition for the 4 period 1st January, 1994 to 31st March, 1995 was only 10.88% against 54.45% and, therefore, the Petitioners were not entitled for DTA sale against their export for the period 1st January, 1994 to 31st March, 1995 but for the period from 1st April, 1995 to 30th June, 1995 the value addition was 81.40% against 30.03% and, therefore. Petitioners were informed that they were entitled for DTA sale only for the period 1st April, 1995 to 30th June, 1995. By the letter dated 14th August, 1995, the Petitioners, inter alia, contested the second Respondent's determination of value addition upto March, 1995 and then upto June, 1995 as according to the Petitioners the same was not in conformity with the Exim Policy. The second Respondent by its order dated 18th August, 1995 rejected the Petitioners' application. The second Respondent amongst others held that the first Petitioner was governed by value addition at 54.45% (under new formula from the date of commencement of production i.e. 6th January, 1994 to 31st March, 1995) and that it would be governed by value addition at 30.03% from 1st April, 1995 to 31st March, 2000. The Petitioners thereafter addressed a letter dated 21st August, 1995 to the Joint Secretary of the first Respondent against the order of second Respondent and then the present Writ Petition was filed challenging the order dated 18th August, 1995 passed by the Development Commissioner. By interim order dated 13th October, 1995, this Court directed Development Commissioner to re-scrutinise the facts and figures and pass a fresh order on application of the Petitioners for permission for DTA sale for the period from 1st January, 1994 to 31st March, 1995 within time granted by this Court. Pursuant thereto, the Development Commissioner passed the order on 24th November, 1995 which has been challenged by Petitioners by seeking amendment in the Writ Petition, but as already noted above, the learned Senior Counsel appearing for Petitioners has challenged the said order dated 24th November, 1995 only to the extent the new formula of value addition provided in Paragraph 119 effective from 1st April, 1993 has not been applied to the Petitioners.
VA = A - B  X  100, where              A VA is Value addition; 
 A     is the FOB value realised by the EOU/EPZ unit; and 
 B     is the sum total of the CIF value of all imported inputs, the value of all payments made in foreign exchange by way of
commission, royalty, fees or any other charges, and the value of all indigenous inputs purchased by the EOU/EPZ unit. Inputs mean raw materials, intermediates, components, consumables, parts and packing materials."

4. The aforesaid Paragraph 119 of the Exim Policy 1992-97 was revised by Notification dated 16th August, 1993 with effect from 1st April, 1993. The amended paragraph of value addition effective from 1st April, 1993 reads thus :-

payments made in foreign exchange by way of commission, royalty, fees, dividends interest on external borrowings during the first five years period or any other charges. "Inputs" mean raw materials, intermediates, components, consumables, parts and packing materials.
Note : 1. If any input is obtained from another EOU/EPZ unit, the value of such input shall be included under B.
2. If any capital goods imported duty free is leased from a domestic leasing company, the CIF value of the capital goods shall be included under B.